Small business still digging out from Sandy

Survey: Many in Shore area still face loss of customers, finances

Apr. 22, 2014

Kevin Stretch, owner of Stretch Cleaning in Long Beach Township, talks at a meeting for small business owners in Highlands earlier this month. Stretch said Monday his business has mostly recovered from superstorm Sandy, but he's not sure what to do about the damage at his office building. Many businesses still have questions about their future post-Sandy. / Tanya Breen/staff photographer

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Russ Zimmer | @russzimmer

Report: Feds considering shifting Sandy aidFederal officials may divert more than $1 billion from Congress’s aid package for Sandy to areas battered by other recent disasters, according to a report in the Wall Street Journal. The story, citing sources familiar with the matter, said the U.S. Department of Housing and Urban Development believes the law requires it to spread some of its $3.6 billion in remaining aid to places like Joplin, Mo., which was devastated by a tornado in 2011. Rep. Frank Pallone, D-N.J., said in a news release that he planned to speak HUD Secretary Shaun Donovan next week. “HUD officials appear to be under the mistaken notion that they are required to spend some of the Sandy aid package in regions of the country not affected by Superstorm Sandy,” Pallone said. “There is no provision in the law forcing HUD to divert funds to areas outside of the Sandy-affected states.” Sen. Robert Menendez, D-N.J. said in a statement that he “will make certain HUD understands the need for our Sandy relief funding is very, very real and should remain the top priority.” In a statement, Rep. Chris Smith, R-N.J., said he is pushing the administration to more quickly distribute Sandy funds to New Jersey residents.

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At the Sand Witch Shop in Highlands, the situation has become dire.

Ever since superstorm Sandy flooded the coffee and sandwich shop with 4 feet of water, Donna Ross and her husband have been struggling to keep the business afloat. But now, she said, soon they might be forced to close their doors permanently.

“We invested everything we had in this place,” Ross said. “So at the age of 53 and 56 (her husband), I don’t know what we’re going to do.”

A new survey by the Federal Reserve Bank in New York says they are not alone.

Nearly 18 months after superstorm Sandy roared ashore, many small businesses are saying the business environment continues to be difficult, according to the Federal Reserve Bank of New York survey.

A year after the storm, 39 percent of small businesses in the region hit by Sandy were losing money, compared to 36 percent that were profitable, according to the Federal Reserve Bank of New York’s Small Business Credit Survey. Another 25 percent said they were breaking even.

The Sand Witch Shop, like so many other small businesses, were hobbled by physical damage from the flooding, but also by the most stubborn source of losses: 59 percent of struggling businesses said their customers left and haven’t come back, according to the survey.

“We had 4 feet of water in the store. I lost everything; I lost all my equipment,” Ross said. “I took my father’s inheritance and bought new stuff and now I’m sitting here with all this new stuff and there’s no business.”

Nearly two-thirds of small businesses had yet to receive any reimbursement from insurance, even though 73 percent of those had property insurance policies. Only 12 percent of small businesses had flood insurance.

Ross said her business interruption insurance, which is supposed to cover income lost during a disaster, didn’t pay her a cent even though they were closed for a couple months.

Half of the firms surveyed tapped into their own assets to cover storm-related expenses, while 40 percent took on more debt.

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The availability of credit frequently was named as a key obstacle a year after Sandy. Nearly half of the firms seeking credit needed loans to meet their day-to-day operational expenses. Even 92 percent of profitable small businesses said they were in need of additional financing.

Stretch Cleaning, on Long Beach Island, isn’t in danger of shutting down, but the housecleaning business is not without challenges left by the storm.

“I lost a couple years off my life,” said owner Kevin Stretch with a chuckle. “I have a lot more gray hair.”

The first floor of his office remains gutted from flooding during the storm, Stretch said. He had expected to qualify for a low-interest loan through the Stronger NJ Business Loan program. He hasn’t heard back one way or another but said “I think I got to just move forward.”

Both Ross and Stretch were critical of the responsiveness of government grants and loans.

Corinne Horowitz, who works with small business owners for the New Jersey Main Street Alliance, said financing was an even more serious need for New Jersey businesses.

The New York Fed’s poll of businesses was collected online from October through December. Twenty percent, or 246 firms, were based in New Jersey.